Investment Research Associates - Page 304




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               The BRT originally consisted of 25 trusts, the beneficiaries            
          of which were all individuals.  Most of the beneficiaries of BRT             
          were members of Kanter's family.  As shown by the BRT agreement,             
          Kanter's 1978 renunciation, and the Forms K-1 attached to the                
          1988, 1987, and 1988 BRT returns, sometime after Kanter                      
          purportedly renounced his interest in BRT and during or before               
          1987, 60 new trust beneficiaries (the JSK trusts) were added to              
          the 25 trusts of BRT.  Although Kanter purportedly renounced his             
          interest in BRT in 1978, including his power of appointment, he              
          nonetheless added 60 new trust beneficiaries to BRT.  According              
          to the BRT agreement, only Kanter, through exercise of his power             
          of appointment, could have created these new trust beneficiaries.            
          Because the power of appointment vested in him the power to add              
          new beneficiaries other than after-born children, the power of               
          appointment was a power of disposition.  See sec. 1.674(a)-1,                
          Income Tax Regs.  Because we regard Kanter as the true grantor,              
          his possession of the power of appointment (a power of                       
          disposition) makes the trust income taxable to him in 1986 and               
          1987.                                                                        
               Weisgal, the named trustee, had no beneficial interest in               
          BRT.  Since Weisgal had no beneficial interest in BRT, he is a               
          nonadverse party.  See sec. 672.  Thus, even if the 60 new trust             
          beneficiaries were added pursuant to a power held by Weisgal, a              








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